InfoSAWIT, KUALA LUMPUR – Crude palm oil (CPO) prices are expected to strengthen in the near term, driven by geopolitical tensions in the Middle East and rising global energy prices.
Reported by InfoSAWIT from New Straits Times, on Monday, April 6, 2026, analysts from Hong Leong Investment Bank (HLIB Research) noted that the Iran conflict has created multi-layered pressures across the plantation sector.
These include rising energy costs, higher fertilizer prices, and logistical disruptions—all contributing to upward pressure on CPO prices.
HLIB has raised its 2026 average CPO price forecast to RM4,350 per ton, up RM150 from previous estimates, citing tightening supply conditions.
Prices are expected to peak between RM4,500 and RM4,600 per ton in the second quarter before moderating in the second half of the year.
“Higher crude oil prices will strengthen biodiesel economics, boosting demand for vegetable oils and reinforcing CPO’s role as an energy proxy,” the analysts stated.
However, medium-term risks remain. Increased soybean production and shifting crop patterns due to rising fertilizer costs could limit further price gains.
Meanwhile, logistical disruptions linked to the conflict may add temporary price premiums, though these are expected to ease unless trade routes face prolonged disruption.
On the demand side, supportive factors include the United States’ Renewable Fuel Standard (RFS) for 2026–2027, potential El Niño impacts on supply, and Indonesia’s planned B50 biodiesel mandate, which could increase domestic CPO consumption by up to 3 million tons annually.
HLIB maintains an “Overweight” rating on the plantation sector, favoring upstream companies with strong cost efficiency.
RHB Research also expressed a cautiously positive outlook, noting that current plantation stock valuations still reflect CPO prices below RM4,400 per ton, leaving room for upside.
However, it retains a “Neutral” stance overall, citing potential volatility driven by global trade dynamics and climate factors.
As geopolitical and energy dynamics continue to evolve, CPO is increasingly positioned not just as a food commodity—but as a strategic component of the global energy landscape. (T2)
